> "both the founders and early investors lost nearly all their shares. (99% of it)" I understand from this sentence that the company was in such an horrible fi

> "both the founders and early investors lost nearly all their shares. (99% of it)" I understand from this sentence that the company was in such an horrible financial situation that even the other people who were on the same situation as you agreed that it was better to raise debt on horrible terms rather than to bankrupt the company. What was the status of the company before ? It could have "simply" just been desperate that everybody agrees to be diluted. The other possibility is that, if you were only 2 shareholders, that the other guy, created an artificial funding round, essentially diluting you (eventually potentially as a Breach of Fiduciary Duty). The key is to understand what is his position now, if he actually lost or not.